Forex traders seem to be in a much better mood in today’s Asian trading session, as market watchers moved on from the Greek debt negotiations stalemate. EUR/USD bounced off support around the 1.1320 level and is up 11 pips (+0.10%) while GBP/USD is resumed its climb and is looking at a 19-pip gain (+0.12%) so far.

The only major report released in the past few hours was the minutes of the latest RBA meeting, which emphasized that the Australian dollar is overvalued in terms of fundamentals. The minutes indicated that a lower exchange rate is needed to support inflation and growth. The Australian dollar seemed unfazed by these comments though, with AUD/USD enjoying a 25-pip gain (+0.32%) and AUD/JPY up by 32 pips (+0.35%).

Japan reported a 6.9 magnitude quake in its Iwate prefecture earlier in the day, leading to a bit of weakness for the yen. Tsunami alerts have already been lifted and officials reported no irregularities in the nearby nuclear power plants.

Forex market participants might focus on the release of the U.K. inflation figures in the upcoming London trading session, with the headline CPI slated to fall further from 0.5% to 0.3% and the core CPI likely to hold steady at 1.3%. Better keep close tabs on these releases at 10:30 am GMT since these could determine whether or not the pound could hold on to its recent gains.

Also due today is the German ZEW economic sentiment index, which is projected to improve from 48.4 to 55.4 this month. A higher than expected reading might allow the euro to extend its recent rebound while a weak result could push the shared currency lower. Do stay tuned for any updates on the Greek debt situation also, as any remarks from top officials could contain clues on whether or not the country might stick with the bailout.

Every day, I will present to you my findings and daily commentaries on what recently happened in the economic arena, possible shifts in sentiment, economic events to watch out for, and their effects on currencies.

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